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Theme of the week for me has been "free software".

It started from a strange source - reading about the judgement in the BSkyB versus EDS law case. Briefly, BSkyB hired EDS in 2000 to build a customer relationship management (CRM) system for two call centres in Scotland. The project was worth £48m, and EDS gave assurances that the system could go live within nine months and be completed within 18 months. However, by 2002 BSkyB had taken the development back in-house (it then spent  £265m on the project) and in 2004 sued for damages. It took years but they won - EDS are guilty of "fraudulent misrepresentation giving rise to damages" estimated at £200m. As you'd expect there were arguments from both sides. EDS argued that BSkyB had been vague about what it wanted. Legal commentators seem to agree that it finally came down to the (lack of) credibility of the EDS principal witness, and that's why they lost their case.

But what seems not to bother anyone is the overall cost of the project. I'm guessing there was more to this CRM than the average Saleforce.com project, and I used to work on call distributions systems in my Telecoms days so I know what these can cost, but a budget of £48 million pounds? And then the cost of £265 million to do it in-house? Amazingly high.

Sometimes when you see coverage of open source technology by certain websites or in analyst reports there's a nudge-nudge factor this isn't really proper grown-up technology. Free software - you get what you pay for - is their implication.

But if this is a glimpse into the world of proprietary Enterprise software I think we need to hope that things have changed since 2002.

It puts the arguments between definitions of freeware, free software and open source software into perspective. The arguments between advocates of "free beer" and "free as in freedom" can be fascinating, but pragmatism says free/open source software is really more about not being ripped off. Not being ripped off by the project costs; by the false promises of a vendor's sales team; by the inflexible terms of a license agreeement; and by inability not to to be able to change the software if you want.

There's a common thread between community projects, companies who offer free or freemium product, commercial open source vendors and free software projects. It is transparency, good value-for-money and respect for the long-term relationship with a customer.

Government is known for the same car-crash examples of ICT projects as the above. The UK government came out this week waving a large open source banner, but achivements included the example that "over 25% of secondary schools use the Linux operating system on at least one computer".  Not good enough.

It's been one of those months where two or three thoughts or threads connect together.

First, we've been exploring tighter integration between CogniDox and Microsoft Windows Office applications. This led us to sign up for the BizSpark technology seeding program (many thanks to BLN for sponsoring our application) and to work with Microsoft technologies; if not for the first time then at least more than usual for us. Completely unconnected, of course, but in the same period Microsoft have started to release software under open source license, and have launched other programs such as WebsiteSpark to rival the dominance of the LAMP stack for web development.

Second, there's been (yet another) flurry of debate concerning the difference between free software and open source software. Eric Barroca, the CEO at one of our document management competitors (Nuxeo) wrote in his blog that he couldn't see a real difference between a free demo from a proprietary software company and the community edition of an open source product. The big claim of open source softare that it generates free sales leads is wrong - it is free trials that generate free leads. Matt Asay, VP Business Developent at another competitor (Alfresco) says that the open source software sales cycle averages 60-90 days, whereas traditional enterprise software averages 6 to 9 months.

Third, and continuing with the theme of software sales cycles, there was a disturbing expose about some of the unpleasant tricks that are used to sell enterprise software licenses. Read the article for details, but we are talking about demo vapourware, underbids followed by expensive add-ons, lock-in through high exit cost, and enforced software upgrades amongst other tricks. I have bought enterprise software in the past, and sometimes it does feel like a war with the vendors.

I read as many news articles about open source business models and trends in the enterprise software business as anyone, but am bemused when some seem to ignore common sense. Companies that have already made a major investment in Microsoft technology are going to keep looking for ways to extract value from that investment.  The vast majority of companies adopting enterprise software (such as a document management system) will consider total cost of ownership, including the non value-add costs of integration and trouble-shooting; at least as much as the license model. A commercial open source vendor with a sales team running to dozens of people is likely to behave in much the same way as a traditional proprietary software vendor, unless they have also rejected the tradition of sales targets, quotas and territories. Which they haven't...

That much seems quite obvious, yet curiously at odds with the earnest, evangelical tone of many blogs on the subject of open source enterprise software. The key differentiator for open source vendors in enterprise software is that they devote more energy to building their revenue from an ongoing relationship with their customers. It's all about mutual respect and transparency.

Miro, an open source video aggregation site using VLC media player, has a novel idea for generating funds. They want each of us supporters to adopt a line of code for $4 per month.

Obviously it will take a while to get adopters for all 46,258 lines of code, but I assume that their "pricing model" has been explicitly calculated and if so it gives an interesting insight into the costs of the business. They would be able to generate a little over $2.2M (£1.5M) per year.

Miro has always been as 'not-for-profit' as there has ever been in software, so I am guessing that these funds would be used to cover employee costs and other overheads, as well as to grow the business. My guess is that there are about 10 full-time employees plus the non-paid community volunteers working on Miro.

That sort of team size and general attitude towards overhead costs looks similar to business plan scenarios I've created in the past. Even with a very tight rein on marketing budgets and low management overheads it's hard not to see it costing around £1M per year. Which means they can either live with a 66% success rate in adoptions or they will have £0.5M to budget on discretionary expansion - more trade shows, staff hires, etc.

Of course, they can also raise money in other ways, so don't treat this as some sort of due diligence on Miro. That's not my intention. I'm just interested in the costs of running a software business.

Anyway, the least I could do after the above analysis was to adopt a line, so I did.

She is very cute.